Motorola taps Baidu, others for China search

NEW YORK (Reuters) - Motorola Inc is letting consumers in China use Baidu Inc or other rivals as default Web search services instead of Google Inc, on phones using Google's Android operating system.

The announcement on Thursday of a partnership with Google's arch-rival Baidu, China's No. 1 search engine, and Motorola's promise of more search deals, follows Google's threat to exit China due to a cyber attack and censorship dispute.

Motorola also said it is providing an Android app store in China, that it will offer on its own phones and to rival handset makers who can obtain licenses to offer the store.

The moves should alleviate some investor concerns that the Google dispute would hurt the cellphone maker's turnaround effort, which is heavily dependent on Android and selling phones in the fast-growing Chinese cellphone market.

"It takes away the risk that Motorola's success in China is 100 percent tied to Google," said Morgan Keegan analyst Tavis McCourt who estimates that Motorola's share of the China mobile phone market has dropped in recent years to about 2 percent from 20 percent.

Christy Wyatt, Motorola's vice president for software and services, said that the company wanted to give consumers choices for search and had been working on providing alternatives for some time.

"In some cases we have either operator customers or individual consumers who are more comfortable with something different. In the case of Baidu its obviously a brand that's very well known in China," Wyatt said.

The executive also said Motorola already provides search options other than Google on Android phones. For example it offers Yahoo search for phones at Latin American provider America Movil.

CHINA UNCERTAINTY

Wyatt downplayed the risks of the Google standoff in China, noting that Motorola was protected by the fact that Android is an open-source system, which means that distribution and development is not controlled by Google.

"To the extent that Google is working out their strategy for offering applications and services, we're obviously anxious to see the outcome of that," she said. "But at the same time the platform itself is open source. We have some really great experiences and we're still very excited about the portfolio."

Wyatt declined comment on Google's announcement earlier this week that it postponed two Android phones including a Motorola phone for China Unicom, saying that she could not discuss future products.

However, the inclusion of a China Unicom comment in the Motorola statement likely means that the delayed phone will now go ahead, Broadpoint AmTech analyst Mark McKechnie said. China Unicom stressed the importance of providing a choice of search sites and other services in the statement.

But McKechnie said that even though Android is open source, there will continue to be uncertainty around its future in China until Google's position there becomes clearer.

"There's still plenty of questions out there. I don't think the smoke's cleared yet," he said.

MOTOROLA APP STORE

Motorola also announced an application store for Android phone users in China, where Google's own app store has not been available, and said it may do this in other countries as well.

"There's an opportunity not just in China, where there is no (Android) market for applications," Wyatt said in an interview.

Motorola supports Google's own Android apps store in countries such as the United States, where apps have helped rivals such as Apple Inc's iPhone.

Motorola said its SHOP4APPS store would be available for new smartphones in China in time for the Chinese New Year, which begins Feb. 14.

Wyatt declined to give details about the other new search partners, saying it would announce those later on. Other mobile search providers include Bing from Microsoft Corp.

Motorola shares closed down 1.5 percent at $7.37 on the New York Stock Exchange, on a day of widespread stock losses. On Nasdaq, Google closed up 0.4 percent at $582.98, and Baidu closed a touch higher, up 30 cents at $439.97.

(Reporting by Sinead Carew; Editing by Tim Dobbyn and Richard Chang)

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